Colt Telecom, the struggling UK telecoms company, has rejected as "entirely without foundation" allegations made by one of its bondholders that it will be unable to repay its bonds when they fall due between 2005 and 2009.

Highberry Limited, which is part of the Elliott Group, a New York-based hedge fund, notified Colt on Wednesday of its intention to petition for the appointment of an administrator to Colt.